The truth about those cuts . . .

Has anyone added in the costs of all the job losses?

I'm amazed that the hidden costs of the Con-Dem (Lib-Con?) spending cuts have not been fully explored or analysed by business journalists, or the commentariat, so I was delighted to see this excellent letter in the Guardian today from two of the country's top academic economists:

There were some key aspects of the Treasury announcement of public expenditure cuts, which were overlooked and on which Treasury ministers must be pressed (Report, 24 May). Two to which we draw attention are the effects on employment and on the budget deficit.

The effect of scrapping the child trust fund will have little effect on employment as the funds transferred to parents have to be saved, and not spent. But the other cuts will have effects on employment, and a "back of the envelope" calculation would suggest a loss of jobs running well into six figures. It surely behoves the government to provide some estimates of the effects (and then the subsequent rise in the payment of unemployment benefits).

The focus has been on "savings" of £6.2bn. This is presented as though the budget deficit will be reduced by a corresponding amount. This ignores that income and expenditures of public-sector and other workers are taxed, and the reduction of the budget deficit will then be considerably less than the often-quoted £6bn when those reductions in tax receipts are taken into account. Further allowance should be made for the "multiplier" effects of the reduction in public expenditure -- that is the consequent reductions in employment as other forms of expenditure are further reduced -- and the reduction in the budget deficit will be even smaller or perhaps non-existent. Much pain, little gain!

Philip Arestis, University of Cambridge

Malcolm Sawyer, Leeds University Business School, University of Leeds

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

Show Hide image

Tony Blair suggests second EU referendum: "Remain voters are not an elite"

The former Labour PM said the facts of Brexit may change minds. 

Tony Blair has floated the idea of a second EU referendum after the terms of the Brexit deal has become clear.

The former Labour Prime Minister told the BBC "you can't just dimiss the 16m people" who voted Remain.

He said: "If it becomes clear that this is either a deal that doesn't make it worth our while leaving, or alternatively a deal that's going to be so serious in its implications people may decide they don't want to go, there's got to be some way, either through Parliament, or an election, or possibly through another referendum, in which people express their view."

Asked whether he was telling the 17m voters who wanted to leave the EU that they were wrong, he said: "You can't just dismiss the 16m people either and say their views are of no account. 

"And by the way, that 16m don't represent an elite, they represent people who genuinely believe that in the 21st century for Britain to leave the biggest political union and the biggest commercial market right on our doorstep is a serious mistake."

There is no way the Brexit decision can be reversed "unless it becomes clear that once people see the facts they change their mind," he said.

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.